Monday, October 5, 2015

Underemployment and wages: September 2015 update

- by New Deal democrat

About the only bright spot in Friday's jobs report was the 400,000+ decline in the number of involuntary part time workers. So far this year, the number of those employed part time involuntarily has declined by -754,000, or about 1/2% of the workforce.

The best way to look at this is as a percentage of the workforce:

In January 1994, when the modern series began, 3.788% of the labor force was involuntarily employed part time. As of September of this year ,it was 3.852%. While this isn't too bad, a "good" number would be under 3%.

The changes in 1994 subtracted about 1% from the calculation of involuntary employment. To give an idea how our present situation compares to pre-1994 data, here it is, subtracting 1%, and then another 3.788%, so that any situation better than currently shows as a negative number, and any worse than the present shows as a positive number:

This is consistent with the idea that we need to see about another 1% decline for this to be a "good" number.

Next, here is the number for those Not in the Labor Force, but who Want a Job Now (NILFWJN):

The modern version of this series also started in January 1994. We are currently at the same number as we were at the end of 1994. Again, not terrible, but not "good" either.

Finally, let's look at the updated U6 underemployment rate (blue) and compare it with the YoY% of wage growth (red):

In the above graph, both are set to "0" at the latest values. if this expansion is like the last 2, nominal wage growth should start to pick up about now.